Multifamily Rents Set Records in 2021

The average U.S. asking rent rose $2 in December to a record-high $1,594, reported Yardi Matrix. Over 12 months, the average asking rent increased $190.

Rents rose 13.5% year over year to end 2021, with growth more than double any previous year recorded by Yardi Matrix. However, rent growth is expected to decelerate this coming year.

“It should be a strong year by historic standards but closer to the 5% annual increases recorded in the middle of the past decade,” Yardi Matrix analysts wrote in the latest report. “Driving the strong market conditions are record-high national occupancy rates and a strong economy. Consumers’ overall financial health should continue to prompt creation of households, which bolsters multifamily performance.”

The robust growth continues throughout all regions. Asking rents rose by double-digit percentages in 26 of the top 30 markets. Six markets—Phoenix; Tampa, Florida; Miami; Orlando, Florida; Las Vegas; and Austin, Texas—registered gains of 20% or more. According to Yardi Matrix, some of the annual growth can be attributed to rents remaining generally flat in 2020. However, the growth since spring has been notable. For example, New York returned to positive territory in July after 14 months of negative growth and saw 14.2% year-over-year gain in December.

Month to month, overall rents were relatively flat in December. Eighteen of the top 30 metros saw month-over-month gains, led by California’s Inland Empire at 1.1% and New York and Charlotte, North Carolina, at 1%. In addition, six metros rose by 0.5%.

A dozen markets saw decreasing asking rents in December, led by Portland, Oregon, at -1%, Raleigh, North Carolina, at -0.7%, and Minnesota’s Twin Cities and Washington, D.C., at -0.6%.

Single-family rentals also ended the year strong, with the national occupancy rate up 0.4% year over year through December. Asking rents for single-family rentals increased 13.8% in 2021.

“While it would be the height of confidence to expect a repeat of that level in the coming year, the outlook for 2022 is bright,” stated Yardi Matrix analysts. “The single-family rental sector wasn’t created in 2021, but it was an important maturation point.”

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